JOE Royle was ordered today to repay the é423,000 compensation he was awarded after he was sacked as Manchester City manager.

The 55-year-old sued City when he received only a fraction of the package he claimed he was due after losing his job in 2001.

Royle, now in charge at Ipswich Town, was paid only é150,000, less tax and national insurance, based on what his salary would have been had he continued with the club relegated from the top flight.

His compensation for breach of contract was awarded at the High Court in Liverpool last July when it was held that, on a strict interpretation of his contract, City were still in the Premier League at the time of his dismissal.

City have successfully appealed, with The Court of Appeal in London today overturning the award and ordering Royle to pay costs of more than é80,000.

The club had urged the appeal judges to reflect the reality of the circumstances at the time of Royle's departure in May 2001 - City's relegation from the Premier League as soon as the team's last match was played.

City officials asked the judges to rule that Royle was not entitled to be compensated on a full salary basis as though the club were still in the Premiership.

Royle argued that the club was not actually sent down to the First Division until some time later, when the three relegated clubs handed over their Premiership company shares to the three promoted teams.

But Lady Justice Smith said today that, whether the club was about to be or had just been relegated, City had inevitably lost its top-flight status and the manager, but for his dismissal, would have been on a lower rate of pay.

Royle was refused leave to appeal to the House of Lords against today's judgment, although he can still petition the law lords for leave.

City said in a statement today: "We are very pleased with this positive outcome. Mr Royle was properly compensated by the club at the time of his dismissal following our relegation from the Premier League in 2001.